Tags: Euro | Tanking | Dollar

BNY: Euro Seen Tanking Against Dollar in 2012

Thursday, 29 Dec 2011 08:04 AM

The euro will plummet against the dollar in 2012, possibly approaching 1.20 per greenback, experts say.

That's if the eurozone manages to prevent any member nations from defaulting and ending the currency zone as it exists today.

"The problems with the euro will express themselves most clearly against the dollar," Simon Derrick, chief currency strategist, BNY Mellon, tells CNBC.com.
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"I thought we would bottom out towards the end of this year, but that looks optimistic now."

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(Getty Images photo)
The euro is currently trading around 1.29 per dollar.

In Europe, policymakers have pledged to better coordinate fiscal policies while the European Central Bank has made loans more available to banks with the aim of loosening credit markets there.

Markets, however, remain skeptical.

"As sovereign risks in the eurozone deepen in 2012, so will the market’s demand for dollars," currency strategists at UBS wrote in a note, CNBC.com adds.

"The political calendar in the U.S. could spring several policy surprises. However, these are 'known unknowns,' which the market is arguably more comfortable with compared to the eurozone's troubles."

The euro has managed to remain surprisingly stable considering the length and extent of the debt crisis, as all debt-ridden periphery countries have managed to avoid defaulting and abandoning the currency so far.

Optimism still persists the continent will work its way out of the crisis despite ongoing volatility.

"Europe is not finished. We're not talking about Zimbabwe here," says Simon Smollett, senior currency options strategist, at Credit Agricole in London, according to Reuters.

"The euro is not a currency that will suddenly become worthless."

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The euro will plummet against the dollar in 2012, possibly approaching 1.20 per greenback, experts say. That's if the eurozone manages to prevent any member nations from defaulting and ending the currency zone as it exists today. The problems with the euro will express...
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2011-04-29
Thursday, 29 Dec 2011 08:04 AM
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